Coverdell Education Savings Accounts

Coverdell Education Savings Accounts allow individuals to invest funds for educational purposes.

Formerly known as an Education IRA, this trust or custodial account is created for the purpose of paying qualified education expenses of the designated beneficiary.

Contributions to a Coverdell ESA are not deductible, but all distributions are tax-free if they are used for qualified education expenses at an eligible institution.

Education savings accounts can be applied to qualified elementary, secondary, and higher education expenses.

Learn how to pay for a child’s education tax-free in your CESA Guide


A CESA can be opened for a beneficiary who is under the age of 18 or for someone with special needs. For 2019, the maximum contribution to a Coverdell ESA is $2,000.

Unlike other savings plans that require earned income, you don’t need income to open a CESA.

However, if you do have earned income you must fall within certain modified adjusted gross income limits (MAGI). Your MAGI for the year that you open the account must be less than $95,000-$110,000 ($190,000-$220,000 for a joint return).